Artisan Spirit: Summer 2021

Page 27

BRAND BUZZ

A STORY OF TWO

ROADS

WRITTEN BY

DAVID SCHUEMANN

Is it better to build your own distillery, or outsource your production?

L

ike many start-up businesses with limTWO PATHS TO MARKET ited resources, the answer lies in your FOR START-UPS time and investment parameters: how quickly you want to get to market, what 1. The first path is referred to as the your flexibility is to change course once Facility Driven route. This is where launched, and how to plan for and supyou seek your own licensing, physical port expansion. distillery, and/or tasting room to deIn this first of three articles, we’ll exvelop your liquid(s) and then develop plore the two primary roads to market for and market your own brand(s). start-up distilleries. We will outline what it 2. The second path is referred to as the takes to follow each path and the pros and Marketing Driven route. This is cons of each option. The next two articles where you outsource your product will delve into the nuances of each path either by sourcing existing product in an effort to provide the best informafrom another distillery or custom tion for new distilleries and their brands. developing your product with another Of the many considerations when esdistillery that produces it for you. tablishing a distillery and brand(s) and The decision between these two paths bringing them to market, one major deshould be given serious thought, accountcision is the structure of your distillery: ing for both budget and timeline to market. Do you want to build a branded house From our experience, far too many startor a house of brands? In branded house ups, boot-strapped for resources and time, architecture, your distillery name is the choose the Facility Driven route. This path brand and acts as an umbrella encomoften leads many distilleries to discover passing all your products into a single they are quickly overleveraged and unable identity. In a house of brands structure, to properly finance their facilities and/or all the products produced by your comare woefully inadequate to support a proppany bear their own unique brand names er marketing and sales plan. The result is as opposed to your distillery name. a lack of flexibility and an inability to shift We won’t dive further into the nuances course if demand drops or exof these options here. pand if success is attained. For However, I recommend READ BRANDED HOUSE vs. HOUSE OF BRANDS example, many distilleries are you read my article, unable to meet demand because Branded House vs. they don’t have enough capital House of Brands in the to support expansion. There are Summer 2017 issue of pros and cons for each path. Artisan Spirit Magazine.

W W W . ARTISANSPIRITMAG . C O M

PROS AND CONS AT A GLANCE OPTION

1

FACILITY DRIVEN

This path requires you to invest in your own distillery, raw materials, inventory management, equipment, and staff. Pros:

>

Allows for ultimate customization and personalization

>

Potentially provides a physical location for consumers to visit

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Allows for optimal artistic freedom, experimentation, and control of distillation

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Provides the opportunity for an additional revenue stream through custom distilling for other clients

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Creates tangible ties to the local community

Cons:

> >

Requires a larger total upfront investment

>

Less flexibility and ability for dynamic expansion

> >

Longer lead times to launch

>

Potential long-term and inflexible mortgage or lease requirements

Can leave little budget remaining for brand development, marketing, and sales

Significant red tape with licensing, zoning, and facility set up

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